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10 Reddit Stocks That Are Too Cheap To Ignore

In this article, we will be taking a look at 10 Reddit stocks that are too cheap to ignore. To skip our detailed analysis of these stocks, you can go directly to see the 5 Reddit Stocks That Are Too Cheap To Ignore.

Reddit, an online platform, caught the attention of investors last year with the infamous short squeeze of GameStop Corp. (NYSE:GME). In January 2021, shares of GameStop Corp. (NYSE:GME) began skyrocketing, with traders from Reddit’s WallStreetBets forum leading the onslaught. The rally sent the stock up 1600% before it fell down to regular levels again. While the rally itself was short-lived, it left a significant mark on Wall Street, with elite hedge funds like Melvin Capital being gutted to the point it had to be bailed out by two other firms. And even though the online traders did not overthrow traditional investing strategies as a whole, they still managed to put Reddit and its investors on the map of the investing world.

Since then, meme stocks and Reddit stocks like Meta Platforms, Inc. (NASDAQ:META), Netflix, Inc. (NASDAQ:NFLX), and Tesla, Inc. (NASDAQ:TSLA) have become an area of interest for investors and hedge funds alike. Traditional and institutional investors began realizing that they could benefit from Reddit stocks as well. Mudrick Capital Management, an investment advising company, initially benefitted tremendously from a Reddit-driven rally in AMC Entertainment Holdings, Inc. (NYSE:AMC) in July 2021. According to an article published by Bloomberg at that time, Mudrick bought up the company’s bonds, providing $100 million in financing in exchange for about 22 million shares. These shares surged by as much as 839%, allowing Mudrick to profit significantly.

According to an article published by the Wall Street Journal in August 2021, institutions like Morgan Stanley and Goldman Sachs began tracking retail trading trends last year because of amateur investors dominating the markets at the time. This year as well, investors and hedge funds are keeping an eye on retail investors and their moves in the market to be able to monitor an unpredictable market to the best of their ability.

Let’s now take a look at the 10 Reddit stocks that are too cheap to ignore.

Our Methodology

We have selected stocks that have been trending on Reddit throughout 2022, ensuring that their share prices are mostly under the $30 mark. These stocks are also popular among the hedge funds tracked by Insider Monkey in the third quarter, and are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest. We have looked at the growth potential exhibited by each of these companies in 2022, based on their revenue growth, profit margins, and more.

Reddit Stocks That Are Too Cheap To Ignore

10. Desktop Metal, Inc. (NYSE:DM)

Number of Hedge Fund Holders: 11

Share Price as of November 22: $2.03

Desktop Metal, Inc. (NYSE:DM) is an industrial machinery company that is engaged in the sale of additive manufacturing technologies for engineers, designers, and manufacturers in the Americas, Europe, the Middle East, and the Asia-Pacific. The company is based in Burlington, Massachusetts. Some of its products include Production System, an industrial manufacturing solution, Shop System, a mid-volume binder jetting platform, and Studio System, an office metal 3D-printing system.

Desktop Metal, Inc. (NYSE:DM) is a company that has been striving to improve the efficiency of 3D printing, but the company has also been diversifying its business with its top-notch aerospace, automotive, and defense solutions. In the second quarter of 2022, the company reported revenues of $57.7 million, showcasing a significant growth of over 200% year-over-year and sequential growth of 32% from the previous quarter. The company also registered a 170 basis point increase in its gross margins from 2021 to 26.7% on an adjusted basis. For the full year, Desktop Metal, Inc. (NYSE:DM) has issued guidance for revenues of $260 million, which is over double last year’s figure, showing a growth of 131%.

There were 11 hedge funds long Desktop Metal, Inc. (NYSE:DM) in the third quarter. Their total stake value was $9.7 million.

Desktop Metal, Inc. (NYSE:DM), like Meta Platforms, Inc. (NASDAQ:META), Netflix, Inc. (NASDAQ:NFLX), and Tesla, Inc. (NASDAQ:TSLA), is a Reddit stock that has been trending recently, while also being popular among hedge funds today.

9. Bed Bath & Beyond Inc. (NASDAQ:BBBY)

Number of Hedge Fund Holders: 12

Share Price as of November 22: $3.11

Bed Bath & Beyond Inc. (NASDAQ:BBBY) is a home furnishing retail company operating a chain of retail stores. The company sells a variety of domestic merchandise, such as bed linens, bath items, and kitchen textiles, among more. It is based in Union, New Jersey.

Alexander Arnold, an analyst at Odeon Capital, upgraded shares of Bed Bath & Beyond Inc. (NASDAQ:BBBY) from Sell to Hold on September 30. The analyst also placed a $7.50 price target on the stock.

Bed Bath & Beyond Inc. (NASDAQ:BBBY) retained its image as a meme stock this July with its stock soaring by 100% in that month. Analyst Arnold at Odeon Capital commented this September that the stock seems to be moving in the right direction at present, further adding that he had increased confidence that the rescue financing secured by Bed Bath & Beyond Inc. (NASDAQ:BBBY) in September gives the company an adequate liquidity runway to get back on its feet. The company saw $500 million of new financing this August, including a $130 million expansion of its asset-backed loan maturing in August 2026. This can help it further strengthen its financial position in the coming years.

Citadel Investment Group was the largest stakeholder in Bed Bath & Beyond Inc. (NASDAQ:BBBY) in the third quarter, holding over 5 million shares worth $30.6 million. In total, 12 hedge funds were long the stock, with a total stake value of $17.9 million.

Miller Value Partners, an investment management company, mentioned Bed Bath & Beyond Inc. (NASDAQ:BBBY) in its third-quarter 2022 investor letter. Here’s what the firm said:

“Bed Bath & Beyond Inc. (NASDAQ:BBBY) saw significant volatility during the quarter as the share price increased from less than $5/share to more than $20/share at one point. Bed Bath’s management has had ongoing challenges with their turnaround plan. With the company balance sheet significantly weakening over the past two quarters and reports of vendor relationships becoming strained, we see significantly less margin of safety. We decided to take advantage of the price strength during the quarter and exited our position at a profit.”

8. GameStop Corp. (NYSE:GME)

Number of Hedge Fund Holders: 13

Share Price as of November 22: $25.16

GameStop Corp. (NYSE:GME) is a computer and electronics retail company based in Grapevine, Texas. The company provides games and entertainment products through its e-commerce properties and stores in the US, Canada, Australia, and Europe. It sells new and pre-owned gaming platforms, accessories, new and pre-owned gaming software, and in-game digital currency, among more.

On October 13, Andrew Uerkwitz at Jefferies took over coverage of GameStop Corp. (NYSE:GME) shares with a Hold rating and a $26 price target.

GameStop Corp. (NYSE:GME) has seen improved sales growth in 2022. In the first quarter, management reported sales of $1.38 billion, showcasing an increase of 7.9% compared to the $1.28 billion figure reported in the first quarter of 2021. This increase in sales was bolstered by a rise in software revenue from $397.9 million to $483.7 million. GameStop Corp.’s (NYSE:GME) revenue associated with collectibles also increased, jumping from $175.9 million to $220.9 million.

In the third quarter of 2022, 13 hedge funds were long GameStop Corp. (NYSE:GME), with a total stake value of $42.7 million. In comparison, 17 hedge funds were long the stock in the previous quarter, with a total stake value of $64.5 million.

7. AMC Entertainment Holdings, Inc. (NYSE:AMC)

Number of Hedge Fund Holders: 17

Share Price as of November 22: $7.27

AMC Entertainment Holdings, Inc. (NYSE:AMC) is a communication services company that engages in the theatrical exhibition business through its subsidiaries. The company is based in Leawood, Kansas. It owns, operates, or has interests in theatres in the US and Europe.

B. Riley’s Eric Wold holds a Neutral rating on AMC Entertainment Holdings, Inc. (NYSE:AMC) shares as of October 12.

AMC Entertainment Holdings, Inc. (NYSE:AMC) is a stock that has shown resilience in the past few years. The company still has a market capitalization of over $4.9 billion, and its total sales were up 26% year-over-year in the third quarter of 2022, compared to sales in the third quarter of 2021. AMC Entertainment Holdings, Inc.’s (NYSE:AMC) EPS in the third quarter was -$0.20, beating estimates by $0.04. Its revenue was $968.4 million, up 26.89% year-over-year, and beating estimates by $7.43 million as well.

Ellington was the largest stakeholder in AMC Entertainment Holdings, Inc. (NYSE:AMC) in the third quarter, holding 10.3 million shares worth about $71.5 million. In total, 17 funds were long the stock with a total stake value of $21.9 million.

6. Gogo Inc. (NASDAQ:GOGO)

Number of Hedge Fund Holders: 17

Share Price as of November 22: $15.15

Gogo Inc. (NASDAQ:GOGO) is another communication services company on our list of cheap Reddit stocks to buy. The company provides broadband connectivity services to the aviation industry in the US and internationally, and it is based in Broomfield, Colorado. It operates through its Commercial Aviation North America (CA-NA), Commercial Aviation Rest of World (CA-ROW), and Business Aviation segments.

Landon Park, an analyst at Morgan Stanley, upgraded shares of Gogo Inc. (NASDAQ:GOGO) from Underweight to Equal Weight on November 1.

The company is a leading player in the broadband connectivity services business for the aviation market. Gogo Inc.’s (NASDAQ:GOGO) stock has outperformed the Communication Services Select Sector SPDR Fund by almost 50% in the first eight months of 2022. The company has been seeing strong demand for its existing lower-speed equipment and services resulting in record revenues. Gogo Inc.’s (NASDAQ:GOGO) cash flow from operations margins of 27% have also helped the company weather the impact of inflation and perform well.

Our hedge fund data shows 17 hedge funds long Gogo Inc. (NASDAQ:GOGO) in the third quarter, and 19 hedge funds long the stock in the previous quarter. Their total stake values were $131 million and $184 million, respectively.

Ewing Morris Investment Partners, an investment management firm, mentioned Gogo Inc. (NASDAQ:GOGO) in its fourth-quarter 2021 investor letter. Here’s what the firm said:

“The core strategy remains to focus on compounders.  As a reminder, a Compounder is a business that has…

– A durable competitive advantage
– Attractive profit margins
– Double-digit growth potential
– Strong management team

And these continue to make up the bulk of our portfolio. Let’s take Gogo as an example. Gogo has a near-monopoly providing internet on private jets in North America. The business has fantastic economics and is consistently growing at double-digit rates. And the stock trades at 12.5x cash earnings. It’s very unusual to find such a good business trading at such a low price. These are the kinds of compounders that we own.  Most of the time, when a value investor has an exciting idea, it fits one of two profiles. The first, is what we call time arbitrage. This is a situation where a good business is facing a short-term, fixable issue. And if you just have enough patience, you will be rewarded. But that’s not the case at Gogo. The business is firing on all cylinders…” (Click here to see the full text)

Gogo Inc. (NASDAQ:GOGO), like Meta Platforms, Inc. (NASDAQ:META), Netflix, Inc. (NASDAQ:NFLX), and Tesla, Inc. (NASDAQ:TSLA), is a Reddit stock many investors are eyeing today.

Click to continue reading and see the 5 Reddit Stocks That Are Too Cheap To Ignore.

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Disclosure: None. 10 Reddit Stocks That Are Too Cheap To Ignore is originally published on Insider Monkey.

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The “Toll Booth” Operator of the AI Energy Boom

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Click to continue reading…